For D.C. Fundraising Firm Under Scrutiny, the Check Is in the Mail

Political fundraising firm BMW Direct raised about $731,000 for Massachusetts Republican Charles Morse, who in 2006 challenged Rep. Barney Frank, by targeting conservatives across the country who were eager to give a prominent liberal the boot from Washington. The only problem? Morse wasn’t even on the ballot, and his campaign only saw 4 percent of that haul, the Boston Globe recently reported.

Three-quarters of the money the firm raised came from out-of-state donors, and only 4 percent of the money was spent in Massachusetts, the Center for Responsive Politics has found. The rest went to DC- and Virginia-based firms connected with BMW Direct to pay for the by-mail fundraising. Perhaps not surprisingly, since Morse mounted no advertising campaign within his own district and most of his donors lived outside it, he received only 145 votes in the primary and dropped out before the general election–but that didn’t stop BMW from continuing to raise money in his name. (The company says he told them he was pursuing a write-in candidacy.)

But it’s BMW’s job to raise funds, not run the campaign, said the firm’s director of development, Jordan Gehrke, and records show that Morse invested virtually no money in getting votes. “Did we get burned by Chuck Morse? Absolutely. He’s the worst candidate we’ve ever had,” Gehrke told Capital Eye.

The company also says they sent Morse $125,000 to spend on campaigning, but Morse told the Globe that’s “an outright lie.” If BMW did forward that sum, it’s unclear where it went: Only $30,000 was spent in Massachusetts, and the campaign ended $100,000 in the red.

The rest of the money raised went to BMW and related companies and subcontractors, several of which share an office, replete with plush leather chairs and ornate furniture, in Washington’s high-rent Madison Building. The groups were paid $5.8 million in the 2006 election cycle by candidates and PACs, including reimbursements for expenses.

If only the actual candidates could have fared so well. Of the 12 candidates for whom BMW did work in the 2006 cycle, half wound up spending more than they raised, and five received less than a quarter of the money raised for their campaigns. So far in the 2008 cycle, candidates and PACs with BMW contracts have paid the related firms $5.7 million, but they have raised less than $3 million. (An early investment pays off later in the cycle, the company said.)

High overhead costs are the norm in the direct-mail business, and the money the campaigns do receive is “money they never would have otherwise touched,” Gehrke said. There is no question the firm is good at what it does. Deborah Honeycutt, a Republican challenging a Democratic representative from Georgia, raised $1.3 million for the 2006 election, outdoing the incumbent by $120,000–an extremely rare feat–but was defeated in the general election. That could be because more than a million dollars of that money went to BMW and its subcontractors, and only about 9 percent was spent on media and campaign materials. Honeycutt is running again in 2008, and BMW is raising money for her.

Then there’s Alexandria Coronado, whose campaign to represent California’s 47th District raised well over half a million dollars that cycled through BMW-affiliated companies. But 97 percent of the money stayed with those companies, and almost none of it was spent on actual campaigning, FEC reports show. (Coronado dropped out of the race before election day.)

BMW’s chief operating officer, Michael Centanni, chalks up high overhead to the cost of doing business. “If you had a business and you did $2 million in sales and got to keep half a million as profit, everyone would say you did a great job.”

The firm’s modus operandi–enticing ideological donors all over the country who want to work against liberals in Congress, even if they’ve never heard of the Republican challenger–enables BMW to raise money for almost anyone who says they want to challenge a well-known Democrat. Because the donors rarely live near the candidate’s district, they may not have any idea how viable the candidate is. But it also enables challengers to mount campaigns they never could have waged, because contributions and party support overwhelmingly go to incumbents.

“The NRCC is broke, and the guys who are getting money are the incumbents,” Gehrke said. “Someone like Deborah Honeycutt? She’s not even going to get a cup of coffee from the NRCC.”

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